Gambling Company: SBTech place $30 million to deal with Cyber Attacks
The online betting firm SBTech would need to reimburse $30 million for covering the effects of a suspected ransomware attack.
The company agreed to do so in re-negotiated procurement terms with Diamond Eagle Acquisition Corporation (DEAC), a blank check firm that has purchased SBTech and the rival DraftKings site.
DEAC requested that SBTech would put 10 million dollars in cash and 20 million dollars over the next two years in an escrow fund in a report from the United States Stock Exchange Commission.
The funds will be used to cover any damages resulting from a “cyber-security incident” on March 27.
As Legal Sports Report reported at the time, SBTech’s website was down in an incident that looked like an invasion of classic ransomware. Hundreds of sites by third parties focused on SBTech’s sports wagering, and an online casino network has been discontinued.
This was almost a week before SBTech began serving foreign clients, but not its US customers. The company also needs US gaming regulators ‘approval before returning operation to US partners.
The DEAC has agreed to pay SBTech some 600 million dollars last year, expects the international and US partners to file litigation for loss of revenue, and created a 30 million dollar fund to deal with any problems occurring as a result of last month’s security incident.
Unless there is no action, the cash and locked-up shares will become held by SBTech. When costs are over 30 million dollars, the DEAC emergency funds must tap into 70 million dollars (25 million dollars in cash and 45 million dollars in shares) that are now in a buffer. A second fund set up as a buffer for unintended SBTech operating penalties and lawsuits part of the original purchasing agreement.
If 100 million dollars are still inadequate, DEAC announced that it would seek additional funds from the existing owners of SBTech.
According to iGaming Company, which first reported on the SEC filing, the management of SBTech agreed with the fund and new terms of the acquisition.
DEAC shareholders expected to approve the SBTEch transaction by April 9 this week, but DEAC postponed the vote to allow shareholders time to review terms in light of the SEC filing and the revised merger terms by April 23.